Lagos, Nigeria’s commercial nerve centre, is a city where making money is swift, but doing business comes with a price tag. A shadowy narrative of tax evasion and business closures has recently emerged in the state.the closure of 34 companies and hotels for non-payment of consumption and personal income taxes totalling about N356.12 million.
Also, companies and businesses resident in the state are supposed to pay business premises tax. This is paid to the LIRS with N10,000 in the first year and N5,000 subsequently.Lastly, a consumption tax of 5% is collected by the Lagos state government. It’s a tax on hotels, restaurants and eateries that sell food and drinks, or any bar operating in the state.
Also, a hotel listed by LIRS, Chelsea Hotel, was not found in Lagos. There is a Chelsea Hotel in Abuja, though. The same also applies to Offshoroomz Hotel located in Ketu. The hotel has been converted into a residential apartment. Mayowa Afe, managing director of Danvic Petroleum, one of the companies allegedly shut down by LIRS, recounted the encounter his company faced because of the government’s action. He described how the company responded immediately to LIRS’ claims, clearing its name within hours of being shut down.
Similarly, Olaoye Olabisi, the manager of High Climax Hotel, shared how the company was unexpectedly billed almost N1 million in unpaid taxes since 2016, leading to negotiations for payment in instalments. When the reporter arrived at the hotel, the gate flung open without any stress, as there was no security office. Esther Ibeanu, the receptionist, who struggled to respond to questions, was able to speak to the reporter about the events that happened at the hotel.“The hotel was closed for about a month before we could open again. Although I don’t know how much was paid, the tax officials had requested about N4.5 million,” Esther said.
Meanwhile, contrary to others, Emmanuel, manager at Jade Place, a Chinese restaurant, who claimed to have worked in the company for more than 10 years, said the place has never been shut down at any point. Yet, the company’s name was on the list made public by the LIRS. She said the LIRS and FIRS do not have the power to shut down a company without a court order, underscoring the need for due process in tax enforcement actions.
The tax lawyer also claimed that the LIRS is majorly obligated to collect PAYE tax and “has no business with other taxes”. Contributing, Mike Falade, executive secretary of the International Centre for Tax and Development, acknowledged the role of naming and shaming tax evaders as a deterrent but cautioned against illegal enforcement actions.
“But from my record, I am not sure LIRS shut down any company to the best of my knowledge; that is why some of the companies mentioned do not exist or are not operating.” “Until there is a synchronisation of data, most of them are beating around the bush. So, there should be collaboration across the board so that the tax process is seamless.
Coker said as long as a company is registered, their details are recorded in the state’s database, which can be accessed by LIRS. Responding to the case of the Chelsea Hotel that wasn’t found, Coker said, “The government cannot lie about where they did not seal. T
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